Saturday, September 11, 2010

International Trade Perils

This post is NOT meant to be critical of the importer who sent me the email and who has posted his story on various complaint boards on the Internet. The post is being offered to help other potential importers from having the same or similar situation happen to you.

I have changed the name of the company to "the fish food supplier" because this blog is meant to be educational and not a means of filing a complaint against any particular company (that can easily be found on other sites throughout the Internet).

The post is about 98% as I received it in an email, the only changes were the date formats, adding of US Dollar amount so it would be easier to see the British pound value to the dollar value and some of the British spelling to US English spelling. My comments in the body of the email have been coded in BLUE.

Additionally, I have placed some notes throughout the post and at the end of the post that will hopefully serve to help other International traders from encountering a similar fate.

Beginning of Email:

Hello and BEWARE!!,

This Fish Food Supply company has just cost me £18,000 ($27,725USD)!!

I began searching for a fish food supplier and came across the company (we will refer to them as fish food supplier), I enquired about there products and there export to the EU, they said they were experienced exporters to Europe and had done this many times before.

FIRST MISTAKE: Never take a company or their representatives word. It means nothing. DUE DILIGENCE - MAKE THEM provide you with at least 3-5 customer references in your country or region in this case for the EU. MAKE THEM DO SO OR DO NOT DO BUSINESS WITH THEM. IF they cry, complain or continue on the "trust us" we know what we are doing path, simply walk away because they do not.

After about a month of communication with this company an order was placed and paid for (** SEE BELOW REMARKS **) and was due for arrival in the UK around the 6/15/2010 this date however the date got moved forward to the 8/15/2010 by fish food supplier, I was not to pleased about this as there was also a lot of koi carp food in the shipment and the koi season would be drawing to an end by the time I received it.

SECOND MISTAKE: Paying the full amount in advance. You now have NO CONTROL over the process or making them meet YOUR deadlines. If anything, pay 50% with the other 50% due upon shipment on the date YOU SPECIFY.

There were also a number of errors in the paperwork from the fish food supplier when my customs clearance agent received it ahead of the shipment arriving, these errors absorbed most of my customs clearance agents and my time for around 10 days to rectify these errors with port health authority.

THIRD MISTAKE: This ties in with mistake two - DO NOT PROVIDE 100% payment until everything is the way YOU NEED it - request copies of the documentation prior to shipment BEFORE you pay the remaining 50% and make sure those documents will pass the customs clearance.


The food arrived in the UK on the 8/14/2010 this was cleared by customs and was just waiting for the completion of a CVED form from the port health authority, this time the errors from the fish food supplier were out of our control. The fish food supplier had not included all the food ingredients in the health certificate, when my customs man contacted the fish food supplier about this they responded with a company letter stating this was just an error from a company clerk and that the ingredients where actually correct on the health certificate and sent relevant paperwork to back this up THESE WERE FALSE DOCUMENTS supplied by the fish food supplier.

FOURTH MISTAKE: All tied back to previous mistakes - the documentation could have been verified before shipment of the goods to ensure that once it arrived in port that everything would go smoothly.

The port health authority then ordered an examination of samples of the food from their testing labs, this took 12 days for these results to come back all the time this is going on i am having to pay £40 (about $61.61USD) per day storage for the container in the port.

The port health authority then found that the fish food supplier had NOT complied with the actual health certificate conditions that all the packs of fish food should bear a label stating "not fit for human consumption" on them.

The port health authority then issued a 2nd notice of rejection into the UK order on the container,,,there were now only two options available: 1) to re-export the container outside an EU country or 2) have the food destroyed by port health authority at my expense (i don't know the cost of this as yet).

The fish food supplier was contacted yet again to see what they were going to do about this problem due to there list of errors in the export/import of these goods, their answer was it was not there fault and for me to try harder to get the container allowed into the UK.

I then spent the last few days contacting various bodies to try and find help, including lawyers, the lawyers contacted the fish food supplier to point out that this shipment was not allowed into the UK purely due to the errors made by the fish food supplier.

There reply to the lawyer was, as you are a lawyer we will not reply to any of your emails regarding this matter.

I spoke to my lawyer this morning and he said it would cost around £17,000 ($26,185USD) to fight this case in china under Chinese law and even though i would very possibly win the case it would be very unlikely i would ever get my money back from the fish food supplier and was not really worth the risk of running up a large legal bill to not get anything at the end of it all.

So I made the decision this morning to have the food destroyed by the port health authority.

End of Email -

My further comments:

I was curious after reading the above email and did a google search on the fish food supplier company. The very first google search result showed them listed as a "Gold Supplier" or Trust Pass member in Alibaba.

Now again, don't get me wrong, Alibaba's trust pass system members are the ONLY sources that are worth following up with because they have paid to have a background check done on them to become a gold supplier/trust pass member.

However, simply because it has been verified that a company is "registered" in some way with the government and and address verifies does not mean they are competent at exporting their products and most of all it does not mean they have ANY knowledge of the import requirements for your home country or region.

Literally, you should NEVER TRUST that a supplier can deliver what they claim to be able to deliver without first making them prove they are capable of doing so.

A couple of other flags flew up for me when I looked at their profile in Alibaba:

Their Total Annual Sales Volume was stated as being US$2.5 Million - US$5 Million while their Total Annual Purchase Volume was stated as being US$5 Million - US$10 Million.

This does not make sense? Or is it just my math?? They have a purchase volume twice as much as their sales volume?? That cannot be sustained but most likely it was just a figure they posted to the profile because the next bit of information shows their Registered Capital as being: RMB 1,000,000 which according to my currency calculator is about $147,000USD? Not very much for a company supposedly purchasing $5 million to $10 million a year - again, if you ask me.

Next you have the Date of Issue of their business registration: 2009-09-30 which means they were only about 6-9 months old when this importer began negotiating with them. Nothing wrong with trying to work with a new exporter, however, it would tend to negate the statement they made regarding their experience in dealing with EU countries: "they were experienced exporters to Europe and had done this many times before".

I tend to doubt they had or have done much exporting to other countries at all.

Last, the profile states: "All legal business licenses and contact persons are verified for those who have been A&V Checked. Suppliers must be A&V Checked before becoming a Gold Supplier." This is again the level of verification, not a condemnation of the trust pass system, but it simply provides you with a "somewhat" better level of company in knowing they are registered with the government and have proven it, however, as stated before, you have still got a lot to do in the arena of "DUE DILIGENCE" before committing ANY funds, even if only 1/3 of the contract upfront.

Personally, I feel the pain of the importer who sent me the above email. Losing money is never easy, whether it is a few dollars or £18,000 ($27,725USD) and in reality it will be much more because he has storage fees and the fee he has to pay the port health authority to destroy the fish food.

Whether you are importing or exporting, if all the i's are not dotted and the t's are not crossed to "YOUR" satisfaction, it is far better to quit now and find another supplier if you are an importer or potential buyer if you exporter. You CANNOT rely on TRUST in international trade, YOU MUST make the seller or buyer PROVE to you they are legitimate and are capable of doing their part of the transaction.

If you fear pissing them off, too bad, there are other suppliers and other buyers. This is business and don't let personal feelings ever make you vulnerable to letting your guard down. CONTROL the deal or the deal could end up costing you dearly.

Ron Coble
International Trade Help Center

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3 Comments:

Blogger info drive said...

A very informative post on Trading.

4:23 AM  
Anonymous relicaexpo said...

This comment has been removed by a blog administrator.

10:44 PM  
Anonymous J said...

Ron Coble your brilliant , keep up the good work.

8:37 PM  

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